2011 (3) TMI 1129 - AT - Central Excise

Refund claim - rejection of claim on four counts i.e. the product was non-dutiable was not correct, the appellants were not entitled for exemption under Notification No. 74/93-CE dated 28.02.1993, the appellants had not discharged the burden of proof in relation to non passing of the burden of duty upon the customer and the claim being time barred - Held that - This is being settled law, it was not permissible for the appellants to raise in the refund proceedings the issue of non-dutiability of the product on the ground that the process did not amount to manufacture. Law in this regard is well settled by the decision of the Apex Court in Flock (India) Pvt. Limited (2000 (8) TMI 88 - SUPREME COURT OF INDIA). Apart from claiming that the appellants is a factory belonging to the State Government, no other facts which are necessary to bring the case within the four corners of the exemption notification have either been pleaded or proved in the matter. Nothing has been pointed out which could reveal from the records that the goods manufactured by the appellants were intended to be used by any of the Department of the concerned State Government. As regards the applicability of the principle of unjust enrichment, it is settled law that the burden in that regard squarely lies upon the assessee. Undisputedly, apart from tall claim in that regard in the reply to the show cause notice, the appellants did not produce any material on record in support of such claim. Attention was sought to be drawn in that regard to the balance sheet. However, balance sheet does not disclose whether the burden in relation to the duty paid on each of the invoices was actually transferred to the ultimate consumer or not. Thus appeal dismissed.

Summary

Issues:
1. Rejection of refund claim by appellants.
2. Finalization of provisional assessment and maintainability of refund claim.
3. Non-dutiability of the product and raising issues in appropriate proceedings.
4. Claim of exemption under Notification No. 74/93-CE.
5. Compliance with conditions of exemption notification.
6. Principle of unjust enrichment and burden of proof on the assessee.
7. Bar of limitation.

Analysis:
1. The appeals arose from orders rejecting the refund claims by the appellants against original authority decisions. The rejection was based on various grounds, including non-dutiable product claim, exemption entitlement, burden of proof, and time limitation. The challenge was on the basis of error in holding finalization of provisional assessment, which was refuted by the records indicating otherwise.

2. The issue of non-dutiability of the product due to manufacturing process was raised in the refund proceedings, which was deemed inappropriate. The law stipulates that such issues should be addressed in main proceedings, not in miscellaneous proceedings like refund claims. This principle was supported by a Supreme Court decision.

3. The challenge regarding exemption benefit under Notification No. 74/93-CE was also dismissed as the necessary facts to qualify for the exemption were not proven. The failure to file the required declaration for claiming the exemption led to the rejection of the exemption benefit.

4. The compliance with conditions of the exemption notification was crucial, and the failure to adhere to these conditions led to the dismissal of the claim. The statement provided in response to the show cause notice did not sufficiently demonstrate compliance with the notification requirements.

5. The principle of unjust enrichment placed the burden on the assessee to prove that the duty paid was not passed on to the consumer. However, the appellants failed to provide substantial evidence to support their claim, leading to the rejection of the refund.

6. The judgment concluded that due to the decisions on the aforementioned issues, it was unnecessary to delve into the matter of the bar of limitation. Consequently, the appeals were dismissed based on the reasons stated in the detailed analysis of each issue.